Design and Distribution Obligations

Design and Distribution Obligations (DDO) is intended to help consumers obtain appropriate financial products by requiring issuers and advisers to have a consumer-centric approach to designing and distributing products. 

From 5 October 2021, issuers and distributors of financial products are required to comply with design and distribution obligations as introduced under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 (DDO Regime).

 

The purpose of DDO

DDO is intended to help consumers obtain appropriate financial products by requiring issuers and advisers to have a consumer-centric approach to designing and distributing products. Three ways the obligations help consumers:

1. Product issuers such as Fidante, need to design financial products that are consistent with the likely objectives, financial situation and needs of the customers for whom they are intended;
2. Product issuers and distributors, need to take ‘reasonable steps’ to ensure the financial products reach customers in the target market; and
3. Product issuers need to monitor customer outcomes and review their financial products to ensure that customers are receiving financial products that are likely to be consistent with their likely objectives, financial situation, and needs.

To meet these obligations, Product issuers such as Fidante need to make a Target Market Determination (TMD) for each of our financial products that are currently available for investment.

 

Summary of your obligations as financial adviser providing personal advice

Obligation	Description
Target market	You must consider the Target Market Determination (TMD) issued by the relevant Product Issuer when giving personal advice to help meet your best interest duty.
Sales outside of target market	You must notify a product issuer of a dealing in a product that is not consistent with the product’s TMD. You are not prevented from recommending the product, if appropriate for your client, even though the client is not in the target market as outlined in the TMD. To help meet these obligations, when investing directly on behalf of an investor, we have added a few questions to each product’s application form. As a financial adviser, under your best interest obligation you may recommend products to clients even if they are outside the target market, however we ask you to let us know if the client is in the TMD or not.  Where you are investing in one of our products via a platform, you will need to adhere to that platform’s process. The platform will provide us with a quarterly report on sales outside of target market.
Significant dealings	Our TMDs outline what may constitute being a ‘significant dealing’. If you become aware of a significant dealing you must report it to us within 10 business days of you being made aware of the significant dealing.
Complaints	You must provide us with details of any complaints about our products you receive from your clients. You should provide all the content of the complaint, having regard to privacy. We are requesting complaints are reported to us within 10 business days following the end of the calendar quarter. Where you are investing in one of our products via a platform, you will need to adhere to that platform’s process for reporting complaints.
Record keeping	You must maintain records and information relating to your obligations under the regime. You must keep records of this distribution information (e.g. the number of complaints and any other information specified in the Target Market Determination) for up to seven years.

Other responsibilities may apply where you are not providing personal advice.

For more detailed information on the obligations, please read the Regulatory Guide 274 - Product design and distribution obligations.

 

The Target Market Determinations (TMD)

The TMD is a document issued by product issuers, such as Fidante, which:

• describes the class, or type, of customers who the product is likely to be appropriate for;
• specifies distribution conditions and restrictions that will help ensure the products are likely to reach customers in the target market; 
• specifies events or circumstances that will require the product issuer to review the TMD for their products; and
• outlines the information that third-party distributors must provide to the product issuer (for products that require a TMD).

We have opted to use the FSC TMD template and have made no material adjustments to this template. The TMD includes all reporting requirements we need to ensure we are meeting our obligations under DDO. Please refer to ‘Reporting Requirements’ below for more information. 

Our TMDs will be available via the following channels: 

• Morningstar
• FE Funds
• APIR website
• Fidante website 
• On request via email

Click here for copies of all TMDs for which Fidante is product issuer.

 

Reporting requirements

• Significant dealings: reported to us within 10 days of being made aware of the significant dealing. 
• Complaints data: reported quarterly.
• Sales outside of target market – captured in the application form process (so no additional reporting required from you).  

We will communicate with you directly on the sample data fields we would like to see in these reports

 

Contact details 

Please contact the following if you have any questions or would like to discuss any aspect of DDO further. 

Fidante Adviser Services

P: 1300 721 637
E: info@fidante.com.au